Entrepreneurship: The Tax Advantage for Financial Empowerment

Interview Title: Entrepreneurship: The Tax Advantage for Financial Empowerment

Today's Valuable Resources/Links:

www.trydent.org

Summary

In this episode, I introduce you to Christina Lynch.

Christina has spent more than 15 years of her career propelling small businesses and entrepreneurs forward in their industries. She has a notable track record for utilizing a flexible and non-judgmental approach with her clients and partners that has promoted the success of positive and profitable business affairs for every party involved.

Christina is the Chief Executive Officer of Trydent Consulting and has worked in and with over 200 businesses in a wide range of industries. Her passion is assisting and elevating small businesses through her expertise in accounting, human resources, and program management.

She received her Master’s degree in Human Resources and Employment Relations from Penn State University. She received her Bachelor’s degrees in Accounting, Finance, and Human Resource Management from Florida State University. Christina is a business consultant with the Small Business Development Center at FAMU, winning Regional Consultant of the Year in 2021. She was recognized as the 2022 Recent Achievement Alumni Award Recipient by the Florida State University College of Business, a 2023 Outstanding Alumni Award by the Florida State University Black Alumni Association and a 2023 finalist for Women Who Mean Business by Tallahassee Woman Magazine.

Today she speaks about:

Entrepreneurship and tax advantages for financial empowerment with a business consultant. (0:08)

Entrepreneurship, tax advantages, and planning for financial empowerment. (4:35)

Starting a business, including tax advantages and risk assessment. (10:57)

Tax planning strategies for business owners. (16:13)

Finding a reliable and knowledgeable tax strategist. (22:14)

Join me for this episode of Mommy Heal Thyself to learn how to gain the tax advantage for financial empowerment.

Transcript
(Note, this was transcribed using a transcription software and may not reflect the exact words used in the podcast)

Intro  0:00 

Welcome to Mommy Heal Thyself.  We featured guests that provide you with the tools, resources and strategies you need to say no to a life of pain and suffering all forms of preventable disease, toxic drugs and unnecessary surgeries. We hope to inspire you to boldly reclaim your ability to heal, and to serve ones to love.

Dr Michelle  0:08 

Welcome my ladies to another episode of mommy heal thyself today we have with us Christina Lynch. She has spent more than 15 years of her career propelling small businesses and entrepreneurs forward in their industries. She has a notable track record for utilizing a flexible, non judgmental approach with her clients and partners and has promoted the success of positive and profitable businesses affairs for every party involved. Christina is the Chief Executive Officer of Trident consulting and has worked with over 200 businesses in a wide range of industries. Her passion is assisting in elevating small businesses through her expertise in accounting, human resources and program management. She received her Master's degrees in human resources and employment relations from Penn State University and her Bachelor's degrees in accounting, finance Human Resource Management from Florida State University. Christina is a business consultant with the Small Business Development Center at FAMU winning Regional Consultant of the Year award in 2021. She was recognized as the 2022 recent achievement Alumni Award recipient for the Florida State University College of Business, and in 2023. She was the Outstanding Alumni Award recipient by the Florida State University Black Alumni Association, and 2023 finalists for women who mean business by Tallahassee women's magazine. So that's a whole heap of accomplishments Christina thank you so much for joining us today.

Christina 2:07 

No problem and happy to be here.

Dr Michelle  2:10 

You know, today we're going to be focusing on entrepreneurship, the tax advantage for financial empowerment. And the reason why this is so critical to us is because a lot of us moms, you know, are in the space where we're kind of playing with the idea of starting up a new business, and sometimes we're skittish and some of us have actually started a new business, but haven't really gotten a real foothold on how to truly grasp the tax advantage of utilizing entrepreneurship, in terms of helping us in the space of financial empowerment. So I would love for you to tell us a little bit more about how you came into this space and what this has meant to you.

Christina L  2:56 

Sure so and definitely one of the ways and when I was looking at where I was in my career, I would admit I'm a Job Hopper. So as I was hopping the jobs a lot of times my prior employers would want me to stay productive. And then I worked for a high tech startup company in innovation park that was located in the same building as the Small Business Development Center. And so my interests because I really enjoyed working with small businesses and found myself in several situations where folks wanted to pick your brain ask for advice. And so as I was, in my early career learning, I really started exploring this idea that I could support others on a greater scale. So through this support really up a small business development center at FAMU, they empowered me to start with volunteering and teaching workshops, and eventually convinced me to be a contract consultant and support as I could. And from there, it really was the beginning of this evolution of these being a business consultant with extensive experience given just because someone saw something in me that I necessarily didn't see at the time. But as that's progressed, you know, you kind of run out and go switch changed things along the way and refine my account. I'm halfway forward and I realized that I really was meant for entrepreneurship, but it was hard to identify it. Because I don't come from a family of entrepreneurs. So it's very different than my upbringing. And so, it wasn't that I needed to jump hop. I just need to make everybody my clients that.

Dr Michelle  4:48 

So tell us a little bit about what do you mean when you say that we need to utilize entrepreneurship as a tax advantage for financial empowerment?

Christina L  4:59 

Sure. So when you're an entrepreneur, depending on your tax structure, type in general, there are various approaches that we could take that can best benefit our lifestyle. So and I say that as a caveat, because as I'm in this, the more the more the longer I've made it, the more that I learned. I recognize that intention is really important when you're navigating through your financial, I guess they're your financial health. But as an entrepreneur, we have the opportunity to take advantage of deductions that a normal taxpayer with a W two cannot take advantage of. And when you're at certain income levels, it may not matter as much. But as you see your income growing, what we call as the middle class recognized as they don't have as much protection to mitigate their tax liability, as would an entrepreneur. Given that. The reality is if you're an entrepreneur, you're more than likely obsessive. What you do anyway. So your shoes choosing to make your entire life about your business. So now that when I go to lunch, because you know I am having lunch and then trying to double it down as a meeting and be like me, that's deductible, versus if I was a W two employee and I'm going to lunch with my co workers. That is not deductible. So there's ways we can navigate and structure our lives to be able to take advantage of tax deductions that can control our income tax bracket. Versus in other situations, you may not be able to and get stuck in that middle ground where you're paying a lot in taxes, and there's not much room for strategy. Yeah,

Dr Michelle  6:42 

no. Now what are the things that you mentioned that I would really love to hone in on a bit there is that you said that you didn't come from a family of entrepreneurs? So I was curious, do you see a difference in the mindset of people who are entrepreneurially geared versus your W two people?

Christina L  7:06 

Oh, for sure, for sure. One I tell it's a bad joke and I'll put that out there for the listeners. I always say I'm toxic. I'm just like, Oh, I'm toxic. Like I just like volatility. I still I'm gonna count it. We're like probably the most stable of all the engineers first but one of the most stable of the entrepreneurs. But typically when you're in a WT role, it's all about stability. And it's about I just just being able to foresee what's going to be right you have a lot more control and timing associated with your work environment. And it's basically in a more limited scope to where you can turn it off and go home or even if you work an extra hour a day. You know, you could still go home and have found it when you're an entrepreneur and depending on the side of the fence you're on, you know, this opinion isn't every regard. But you're generally speaking working more than 40 hours a week. Now, granted, everyone's financial goals are different. Everyone's lifestyle is different. But when you are a graphic and you have to bootstrap your way through it, because sometimes things that we can't control, you know, you're putting in 50 6070 hours a week, and there is no off when you are the boss. And I would say prior to the scaling process, when you can't afford a lot of things. You know, you're making all the decisions. You're the point of contact, you're the face of the business, and you don't have as much luxury of being able to just go on vacation for a week and turn everything off without there being some type of significant consequence to it. So I can say generally speaking stability of not just what financial stability, time stability, schedule, stability, you know, there's a lot that's much more of a roller coaster when you're an entrepreneur.

Dr Michelle  9:08 

So now, when we look at the role of entrepreneurs, is there a common mistake that you find that people make as they're trying to transition into that entrepreneurial space?

Christina L  9:24 

Um, I would say that lack of planning is definitely a deterrent for a lot of people. And hey, don't get it twisted. I did not have like a full business plan. But of course everyone should have helped me would have helped me, but you know, we don't plan me. take advice from the cousins and the friends that are really not supporting our business, or we see a need, but we don't assess if the target market actually cares about that need. So when we don't plan and do our research second, competitors, truthfully, the part that people really don't like doing is the money the financial part. That the it can save a lot of hardships, so we're still going to experience the hardship. But if you know that it's a two year journey, or a three year journey, you can prepare yourself better. You know, and you think you're gonna make a bunch of money in six months, and now you gone through all of your resources, you're discouraged and now you're having to restart restricts re strategize in order to survive. It makes all the difference in the world. We do our homework on the front end, versus waiting to see what happens throughout the process.

Dr Michelle  10:41 

So what are some key components of the homework that we should be doing ahead? of time? Like what is it that you would suggest to a woman that is considering shifting into the entrepreneurial space?

Christina L  10:57 

Yeah, so firstly, it wasn't who we're trying to target. Your Target Market cannot be. I understand everyone can have and use a thing but your target market is never everyone. So identifying who is your ideal client is really important. And that's one two, understanding what is it that you're offering, and not just the actual product or service, but what solution are you offering for that target market? Because when you sell it, you're not just going to say like, I'll use the example it's freezing in my office today. So granted, we didn't have AC last week because storms cut you know, it'd be a great for someone right now a corporate blanket blanket you Oh, what is the solution? If you had a blank and you went to every workplace trying to sell it, you might sell out, but if but if you're in summer heat at farmer's market, no one is thinking and I was like it so you know, we want to know like, what is your solution to that product or service that you're offering? And then knowing what is the cost to sell it? What is the service and what is the cost to operate the business? Because we want to know how much do you have to make the breakeven How much do you have to make to make money? And what are the amount of units that you must sell to get over the hump? So those things are going to help us in assessing our strategy. When we have that information. If I know that I need to sell 100 Blankets because it's cold. Then we can look at where is my target market, how do I reach them? How do I market to them? But to get to that point, we really do need to know the numbers and who that person is that you're trying to sell to. And what is it that you're selling deeper than just the actual product or service.

Dr Michelle  12:58 

So now, let's zoom back into your realm. In terms of looking at the tax advantages, what are some of the things that we can do to set us up properly to be able to take advantage of the tax structure the way it is currently?

Christina L  13:18 

Yeah, so one I would say deciding on your business entity type is important because it going to dictate how we organize our data. So typically, folks start with a single member LLC, or something like I don't even care about that. It's going to be a sole proprietor. It's all about risk. So the first decision is, how much risk are you willing to take? You know, so that that's to get past that point? Then we determine how are we going to structure our finances so organizing our money is really important, not just on what we call receivable, what happened to it? And accounting is nothing more than organizing the information. So let's take the numbers out of it for a second. And we need to be able to organize how much did I spend on my automobile on travel on advertising and office supplies. So having a system in which we can organize that information is important, because in the event you were taking out it it is on you, the taxpayer to justify that not your tax preparer is no one else is on you. So that information is critical, or to make sure you can prove and that documentation. It's also going to be critical for you as a business owner, to be able to plan for the future because we're going to use historical data to help us in planning forward. But when we're thinking about the tax advantage, the first thing that comes to mind if you're considering starting a business, is that you can write off startup costs, even if the business has not started. Wow, that's an important one to note and that's what I believe a lot of money on the table because so like one that in business yet, but you can make that out. So you know, let's organize that information. So you can take advantage of that benefit. So a home office isn't you know, is a deduction

Dr Michelle  15:17 

one thing before you go further Sorry, what are what are some examples of startup costs that you did?

Christina L  15:27 

Sure, so like if you're starting a website if you had to hire website designer, your domain information if you had to do any, like buying initial products or supplies to help you get started, your business cards, your business registration with the state of Florida or the state in which you reside in. So you're doing the things that directly contribute to starting the business. Are going to count.

Dr Michelle  15:54 

Okay. All right. So, oh, before we go any further, you also mentioned that the first decision that we have to make is to determine how much risk we're willing to take and that will determine what type of structure we have. Could you explain a little bit more about what you mean by that?

Christina L  16:13 

Let's see. Absolutely. So for instance, when I first started and I was like, it's just bookkeeping. I don't need a business. I'm just gonna do it by myself. And so I'm a sole proprietor and doing things and X, Y and Z. But then I had a hiccup I'm gonna call it a hiccup, and I realized really quickly I was not willing to risk it all.

Unknown Speaker  16:37 

I want to keep my house

Christina L  16:42 

that I have, I want to exactly that limited company. Looking at real threats right now. So then I started an LLC, and then same thing, you start going I'm official, now I have a business. And then I had another little hiccup and then I realized I'm gonna get insurance because that's gonna be really expensive. It was a blow off my face. Yeah. So then I'm like, Okay, I'm gonna get inserts because I'm, as I'm learning, I'm realizing I was accepting more risk than I acknowledged and actually understood to be taking. And then as I've grown, and now I'm an escort because I'm, I'm reaping benefits of my efforts. But that means my taxes are increasing and I don't like that. And I don't want to tax my business on my personal tax return anymore. Yeah. Escort. Yep. And in that way, I can have a W two and be an employee of my business and have a separate tax return than my personal so in the event, I have to submit anything. My Social Security number is not

Dr Michelle  17:57 

interesting, interesting. So now, moving forward, what is the major tip that you would give to someone who is either considering going into business or may already be in business and may not necessarily be savvy with regards to taxes and how they operate and the fact that this is the final frontier of financial empowerment? I mean, we have lots of cases right now wink wink that are going on that tell us the power of recognizing tax structures.

Christina L  18:41 

Yes, yes, it is a thing. I will say that you should be considering your taxes all throughout the year. It is not a January, February. Now we address the taxes. By the time we get the tax season, the tax year is over. I can't help you. I can't say oh, how do I find more deductions. So if you didn't spend the money, I don't know what to tell you. It's too late. So the best time is like you know, you prepare to always be prepared. And that's one of these situations where as we are in business and growing in business, what differentiates those that are maximizing their tax? Does that or not? It's having a tax planning strategy. And it's understanding one How does your business work? And how do you can leverage that to take advantage of the tax law, but it requires you to know your business intimately on a higher level, so working on your business, not in your business.

Dr Michelle  19:52 

So what things should be a part of an overall tax strategy?

Christina L  20:00 

One, identifying and knowing what your financial goals are, and I'm going to just have little sub bullets there for a second. If you know you're going for financing, purchasing a home getting a loan in the next two to three years, it's not going to help you to drive down your income. So tax planning strategy is not always paying the least amount of taxes, but it's also supporting what you said. It's also important sublet to it to say that if you are constantly driving down your income and not paying taxes or self employment taxes, you're not paying into Social Security, and you're gonna be unpleasantly surprised once you're ready to retire and accept Social Security. So one knowing your financial goals are really important, because it has to tie in for it to work. Two, I would say is understanding how your business operates and how your entity type operates, because that dictates what you can take advantage of and what pathway forward. So if you're a sole proprietor or a single member, LLC, you there's there's certain retirement accounts that you can have. So you cannot set up a 401 K with you as an employee, because you can't be an employee of a single member LLC. Determine what other retirement accounts do I want and how much can I ducked taxes on the tax level from each type. So there are instances if you are a single member LLC and you'd have a high net income, you might get what they call a SEP IRA, because you can deduct up to 25% of your income and that helps to drive down your taxable income. So even your retirement accounts have different tax advantages. So that but it goes back to the and I would also say you know making sure you find someone that can work with you so they understand your overall vision and can support you in that. But tax planning is not a one and done. It is a long term strategy. And so we can talk about all the things but it takes time to implement things. And we just want to be intentional and consider it as a marathon. Someone says I need to make all these changes in three months. I'm not saying it's impossible, but the likelihood that it's gonna stick is low. Because I've been doing this for 15 years I've seen what happens. I just end up having a bunch of meetings without results. So now that this is a long term strategy, let's think about what let's look at the most impactful items and start at the top and we work our way down. But it might take a few years to get there because you're still reading business and trying to be profitable in addition to all of the other things we're working on. So

Dr Michelle  23:01 

now, what are some qualities or characteristics that we should look for in someone like yourself who is a tech strategist or business strategist? And in alignment with that, what are some ways that people can learn more about working with you? Do you have any classes or workshops or resources that we can connect with?

Christina L  23:25 

So I would say that most accountants are busy. There is not I mean, granted communication skills with accountants too, but we're all busy. Wow. So I would love to say someone who has time green because that is important. But I also want to acknowledge there's a shortage of accountants. So spacing gray is like my theme for 2024 in our industry, but someone that you can comfortably communicate with So are they actively listening and willing to help you? I will acknowledge that even for myself, you know, it takes time because I am trying to like you want to serve everyone. But the concept of wanting to support everyone means is I have a longer lead time. And so do I just keep you at the door and say goodbye or do I say I can help you but it might be three weeks until we get together. So I would say one someone that you can comfortably communicate with and someone that is actively listening and helping you towards that. Granted, depending on your expectations, you know, pricing can vary widely. But I will say that it goes back to the quality of that relationship is generally more important in our space and taxes. You can get a cheaper price. You know he's gonna keep the price you're getting what you need is is aligned with you. So alignment is important intention is important. So when you can grow with in a long term, so trying to identify long term relationship is really important. So then knowledge so do they have the proper credentials to support you? Like I'm not a CPA, but I am an enrolled agent with the IRS. So I acknowledge that I don't want to be a CPA. It's not interesting to me at all. It's to me it's it's ironic I ended my career in one of my that I broke one of my vows which is I would never work for insurance and accounting firm. And it's like that, to me. It's like nails on a chalkboard, but I will be an enrolled agent and be able to to prove Okay, I'm done on the tech side, but even in that space, you know, the tax law changes every year. The IRS rule change all the time. So it's always a learning curve for all for most professionals. We have a base knowledge, but it's a moving target. So do they have the baseline knowledge to support but just know that we're going through this together? Um, so that would be the other piece I would say alignment with you as a person in your goals, active listening, someone that you could communicate with, and then the other side of it is do they have the credentials and the baseline knowledge to be able to support you in what you're trying to do? As far as reaching out to me? The best way to is through actually the website tried to.org A T Ryd and t.org. And there is an inquiry form on there. And what that does is allow us to see what you need help with and that initial consultation without you waiting three weeks for me to contact you back. So it just magically shows up and I'm learning the power of streamlining operations. As I am trying to learn this myself, I'm recognizing that I am the bottleneck in many cases and we're trying to fix that so I can continue to support more people. I'm hoping to have more resources that will be readily available. To folks that have more common questions. It's actually a project for this fall. So hopefully there'll be stuff that can direct on the website soon. ready just

Dr Michelle  27:09 

yet. And ladies, I'm going to be having to try to.org in the show notes so you don't have to try to remember what she said and all that kind of good stuff. And one last question, which is when we're preparing to work with someone like you or you, is there some pre homework that we need to process more at ease?

Christina L  27:38 

is a great question and that is something that I am working on myself. It depends. So yes, having your information compiled is always helpful. Having financial statements in that 12 months of bank statements is always helps the process but depending on your business type and entity, it's hard to say what those documents are. And it's something that I'm trying to figure out how can we pin down that way if you're a single member LLC, this is what you need. If you're an S corp. This was pre made. But generally speaking bookkeeping throughout the year makes it so much easier to support you. Otherwise, it's additional work and additional time that can that can slow the process down. Yeah.

Dr Michelle  28:26 

Awesome. Well, my dear, I thank you so very much for taking the time to share information with our audience because I'm telling you ladies, you've got to have a gig especially in today's world. You cannot afford to be just a W two you have to have a side hustle. And hopefully that side hustle for some of you girls will expand to the point that it will allow you to be liberated from the shackles of w two world. But that's another story altogether. I am biased and and we look forward to seeing you in our next episode and until then, peace and blessings.

Closing: Thank you for tuning in for this episode of Mommy Heal Thyself, if you liked what we're doing here, please share subscribe, like us and leave a comment. Your feedback is very much appreciated.

Transcribed by https://otter.ai